Chances are you or someone you know has uttered the words 'my next car will be electric'.  And why not? The environmental benefits of electric vehicles (EV) are clear and significant global investment is carrying EVs into the mainstream.  However, much like road testing a car, one size does not fit all.  The logistics sector cannot make the shift to green transport as easily as you or I.  Inadequacies around battery capacity for the heavier HGVs coupled with the need for regular recharging make the EV offering unattractive.  Similar concerns are felt in remote communities particularly for rural public transport and emergency services where EV is simply not a practical alternative to a petrol or diesel vehicle. 

Enter the hydrogen vehicle (HV).  HVs feed hydrogen into a fuel cell where it mixes with oxygen and starts an electrochemical reaction to produce electricity which then drives the vehicle's powertrain.  The only emissions are water vapour and heat.  An HV can be refuelled as quickly as a petrol or diesel car, and is capable of long trips (approximately 300 miles).  Shifting  momentarily from land to sea, it is exciting to see a trend towards hydrogen fuelled ferries with the first hydrogen fuelled passenger ferry expected to hit Norwegian waters in 2021.

While enthusiasm for HVs is increasing, investment is a long way behind that of its better known EV cousin.  The refuelling infrastructure in the UK desperately requires expansion. There are just 16 HV charge stations across the UK compared to over 30,000 EV charge points.  Other countries are taking HV investment more seriously and the UK are at risk of being left behind. Germany has pledged to have 400 HV refuelling stations operational by 2023.  But better end-user infrastructure is only part of the picture; investment is also required to improve production of the gas.

Hydrogen is not a naturally occurring gas and there are several ways to produce it.  One preferential option is by electrolysis from renewable energy sources, a process known as 'green hydrogen' production.  According to the International Renewable Energy Agency the production of green hydrogen is projected to rise rapidly in the coming years and this is good news for those already invested in renewable energy.  Green hydrogen offers an attractive diversification option with the added incentive that excess power generated from renewables such as solar and wind can be stored as hydrogen and used to power HVs as long as it is pure enough. 

Hydrogen production is also not reliant on the national grid.  It can be made in local hubs using existing renewable energy infrastructure.  To support the development of the production of green hydrogen the UK government must incentivise the use of renewables to produce hydrogen rather than the cheaper alternative of fossil fuels like natural gas, so-called 'blue hydrogen'.  The USP for future buy-in must be the ability to use existing low-carbon infrastructure and store power which would otherwise be lost.

Hydrogen does come with its drawbacks, a major one being concerns over safety.  The storage of hydrogen carries risk of explosion resulting in the threat to life.  The production of hydrogen is energy inefficient, as for electrolysis you first need to produce electricity and then use that to produce hydrogen, although using excess electricity generated from renewables is a way of alleviating this. There are also issues around leakage resulting in inefficiencies in the production process.  Hydrogen is much less dense than air so can easily escape through infrastructure that is not designed for it, such as metal gas pipes.  Hydrogen has three times less energy by volume than natural gas, so ideally needs to be stored as a liquid otherwise it takes up too much room. Investment in technology and innovation concerning the storage of hydrogen will be required before HV can truly gain traction as a complimentary offering in the journey to net zero emissions.   

EVs have made a seismic contribution to the UK's commitment to reduce carbon emissions, however arguably HVs are yet to have their day.  Hydrogen has the potential to be an even cleaner, greener fuel and brings practical benefits for remote regions and the logistics industry.  

There are also biofuels available, which can be blended with gasoline and diesel. The UK's Renewable Transport Fuels Obligation rewards fossil fuel suppliers with credits for using a higher proportion of biofuels in their fuel mix, currently 10%. Biofuels offer a lower-carbon alternative to gasoline and diesel in the medium term, until the use of EVs and HVs increases.

Neither EVs nor HVs can solve the problem of building a zero carbon transport system alone, but both have a seat at the table.  Look out for a marked geographical – and size - split in the vehicles we see on UK roads, with higher uptake of EV domestic vehicles in urban areas where journeys are shorter and access to charge points more abundant.  Whereas HVs could be more prevalent in rural areas and with larger goods vehicles reflecting the superior range they offer and the location of those sectors likely to benefit the most from HV production.  

Key Contacts

Carrie Armstrong

Carrie Armstrong

Partner, Real Estate
Edinburgh, UK

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Jodie Dunz

Jodie Dunz

Managing Associate, Real Estate
Edinburgh

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